asos, the next online retail model?
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Helixa16, rue Brey - 75017 ParisCreative Commons License
Asos,The Next Online Retail Model?
July 2012
2
Why Asos?
3
ASOS is the largest european pure-player on online clothing retail- Profitable since 2003- Has delivered 63% CAGR over the last 5 years- Should exceed 1b€ in revenues by 2014 on our forecasts
International business accounts for 59% of sales- Free shipping shipping to 190 countries - No foreign warehouse- Top 5 most visited online fashion stores
What is the secret of Asos?
4
Asos at a glance
5
ASOS launched in the UK«As Seen On Screen» sells clo-thing and accessories as seen in films and on stars
ASOS Business model Maiden Profit
ASOS IPOASOS was admitted to AIM on the
London Stock Exchange
ASOS MagazineFree magazine on last women’s
fashion trends to promote ASOS items
2000
2001
2007
2004
6
ASOS sitesLaunched American, German and French languages versions.Then, Australian, Italian and Spanish languages (2011) and Russian (2012)
ASOS officesOpened the first international office in Sydney, Australia
ASOS own label At first, a label only for women,
then extended to men
ASOS marketplaceAdd small business and customer
to customer sales to their e-commerce offer
2010
2012
2008
2011
7
ASOS2012
UK 198 £m sales
(41%)+7% (vs 2011)
CUSTOMERS17.5 m unique visitors (+35%)
4.4 m active customers (+38%)
BASKETS63.5 £ average basket
+6% (vs 2011)
ORDERS11.8 m orders
+52% (vs 2011)
INTERNATIONAL284 £m sales (59%)
+103% (vs 2011)
+46% GROWTH
(2012 vs 2011)
190 COUNTRIES
AMBITION 20151 £b SALES
495 £m SALES (2012)
Source : ASOS 2012 Full year financial results
8
Asos,A clear and aligned positionning
vision
mission
target
E-stores & points of interaction
Be the online Fashion destination for young adults: inspire and power Fashion discovery
Provide the best online shopping experience for fashion through one of the largest offer (branded & own label products in womenswear, menswear, …) for all prices and enriched with social platforms
- Young adults (16 to 34 years old), men and women- Highly interested in Fashion - Digital natives
- 7 country-specific websites for: UK, US, Australia, France, Germany, Italy, Spain- All devices and social networks- Asos Magazine
Source : ASOS website
9
Asos: an online success story
10
Asos, Skyrocketting Turnover while significant Margins
Source: Company data, Credit Suisse estimates
0m£2004 2005 2006 2007 2008 2009 2010 2011 2012
8 m£ 14 m£ 20 m£43 m£
81 m£
165 m£
223 m£
340 m£
495 m£
CAGR 2005-2012: +66%
CAGR 2005-2012: +71%
0 m£ 1 m£ 1 m£3 m£ 7 m£ 14 m£ 20 m£ 29 m£
42 m£
Revenues EBIT
11
A Growth fueled by Innovations
0m£
100m£
200m£
300m£
400m£
500m£
2004 2005 2006 2007 2008 2009 2010 2011 2012
ASOS own brand (2004)
ASOSCosmetics
(2005)
1th online fashionshow UK (2006)
Asos Magazine(2007)
ASOS outlet(2008)
CollectionASOS maternity
(2008)
ASOS for children(2009)
Designer Store(2009)
ASOS Life(2009)
Launch inUS, France &
Germany(2010)
LaunchAustralia, Spain &
Italy (2011)
Facebook Store(2011)
Mobile & Marketplace
(2010) ASOS Apps(2012)
ASOS Salon(2012)
CollectionASOS for men
(2007)
Source: Company data, Credit Suisse estimates
12
Expected sales growth over the next years in a gloomy market
0 M£
200 M£
400 M£
600 M£
800 M£
1 000 M£
1 200 M£
2009 2010 2011 2012 2013e 2014e 2015e Uk Sales International Sales
ASOS sales growth, UK & International
Source: Wells Fargo Securities estimates, December 2011
13
It delivered its 1st operating profit in 2003, only 3 years after its launch
Net-a-porter profitability is quite an exception thanks to high luxury margins
Asos compared to other Online Retailers
-27,8%
1,3%
5,5%
8,3%
8,5%
15,4%
-30,0% -20,0% -10,0% 0,0% 10,0% 20,0%
EBIT % of sales for majors e-tailers, FY 2010-2011
Source: Company data, Credit Suisse estimates, December 2010
14
How does ASOS manage to be so profitable online?
15
A Very Attractive Customer PropositionA Highly Effective International StrategyA Constantly Improved Cost Structure
16
Womenswear
56%
Menswear
20% Accessories
16%
Beauty
8%
ASOS sales split by product
An Appealing Product Offer Is the 1st Pillar of ASOS Attractiveness
Source : SG Cross Asset Research
17
A large range of products
Zappos
Forever 21
Asos
Debenhams
La Redoute
M&S
Zara
H&M
0 1 000 2 000 3 000 4 000 5 000
Tops & T-shirts Blouses & Shirts Dresses Jeans
In Europe, Asos has the leading range proposition available, parti-cularly targeting the 18 – 34 fashion forward.
ASOS Womenswear Range VS global peers, Full Price, August 2011
Source : Company websites, Deutsche Bank
18
With well targeted prices and a very competitve entry level
20 € 285 €
0 €
H&MZARA
TOPSHOP
URBANOUTFITTERS
ASOS
60 €
255 €
485 € 485 €
40 €
10 € 20 € 25 €45 €
20 €
top priceentry price10 € 40 € 20 € 60 €
25 € 255 €45 € 485 €
Source : Company websites
19
Serve by a highly convenientservice proposition
Cost of delivery Free4 £ for UK
and above for international
5.95 $ - 6.95 $ for USFree above 50 $ for US
Free shipping above 75 € for EU
Up to 4 days in UKup to 10 days and more
in EU
4 days for UKand more for international
Free for UKAt your own cost
outside UKAt your own cost
4 -> 10 days
Free
Speed of service
Ease of return
Source : Company websites
20
0
500
1000
1500
2000
2500
3000
3500
4000
4500
ASOS
Bersh
ka
Pull & Bea
r Zara
H&M
New Look
Next
M&S
Deben
hams
ASOS is a good example of a brand that has made of its community a strong pillar of its business model
ASOS facebook likes per £1m of sales VS global peers,August 2011
Asos, The most «liked» Fashion retailer
Source : SG Cross Asset Research
21
The 2nd visited clothing retailer on the planet, a strong indicator of ASOS appeal
Postion Name Average Daily Visitors (000s)
1 VANCL.com 920
2 ASOS Plc 749
3 HM.com 606
4 Nike 465
5 Moonbasa.com 458
6 Trendyol.com 380
7 Inditex Group 357
8 Bonprix 353
9 Forever 21, Inc 327
10 Limited Brands 317
Retail Apparel 18 001Total
Source : Comscore Ranking
22
ASOS Marketplace - 2010
One of the largest Fashion Marketplace with:• 65,000 products listed • 500 boutique sellers from 95 countries • 28,000 individual sellers from 98 countries
Customer Value AddedGet access to small brands and designers, but also to vintage products. And get the opportunity to sell their own items and creations.
ASOS Benefits• Offer the largest range, through own & external brands,
small retailers, designers and vintage • Engage your customers giving them the chance to sell
and get inspired by other customers
23
ASOS Fashion Finder - 2011
Social platform to see the new trends and the most popular looks & outfits among the community. Around 134,000 outfits created and 174,000 items of user generated content.
Customer Value AddedBe in the known about Fashion thanks to a large choice of trendy looks created by other customers and get inspiration to develop their personal style
ASOS BenefitsEstablish ASOS as an authority of Fashion Source new it brands and products for freeMake profit of a social platform with very active users (1.9m social comments and votes)
24
ASOS Mobile Website and Apps [2009 – 2011]
Since 2009 ASOS website is available also on mobile phones. Mobile sales rose 800% Y-o-Y in 2011, and should stand for 20% - 30% of global sales in 3 years for Nick Robertson (ASOS Ceo).
Customer Value AddedNot only get access to the ASOS offer at any time through any device, but also discover new looks and brands through the magazines
ASOS BenefitsMake buying at ASOS easier and available on all the Internet devices Enrich the shopping experience adding contents through the magazines
ASOS MOBILE WEBSITE
SCAN TO SHOP
ASOS MAGAZINE
ASOS MEN’S MAGAZINE
25
A Very Attractive Customer PropositionA Highly Effective International StrategyA Constantly Improved Cost Structure
26
ASOS highly efficient International strategy
ASOS fast International expansion is in part due to its online-only model, as no time is required to hunt for new store locations and fit out new outlets.
But ASOS has also been very efficient in replicating its successful UK strategy of lowering delivery charges and improving services to drive growth in new markets.
From a UK e-tailerto a multi-country web platform
ASOS global strategy roadmap
Source : ASOS 2012 Financial Report
27
Emerging markets, the next ASOS growth opportunity
China is already the 6th largest country by sales for ASOS. And there’s a huge potential since the online apparel market is relatively underdeveloped and ASOS proposition is likely to be well-received.
ASOS is expected to make much faster progress into immature markets than other traditional European retailers, especially in China.
ASOS exposure to emerging markets vs Global peers,% of global sales in 2010 and in 2015e
2010 % sales in emerging markets 2015e % sales in emerging markets
0%
10%
20%
30%
40%
50%
60%
70%
80%
Inditex Esprit ASOS H&M Marks & Spencer Debenhams Next Primark
Source : SG Cross Asset Research
28
A Very Attractive Customer PropositionA Highly Effective International StrategyA Constantly Improved Cost Structure
29
Reinvesting Gains In Customer Proposition To Drive Growth
Payroll & sta�Delivery costs recovery Warehousing
Marketing CostsProduction CostsOther Opex Costs
13,5% 8,5%
9,4%
6,4%
3,9%
4,3%
1,1%
0,6%
6,0%
4,8%
2009 2010 2011 2012
112%
84%
38%
16% All lines of the P&L have seen efficiency gains since 2009. A noteworthy effort has been made on staff and warehousing costs.
As a result delivery is now a cash investment for ASOS while it was a source of profit in 2009.
Source : ASOS Company Reports
30
A Model inspired from Online and Fashion Best Practices
31
Amazon and ASOS, same vision : customer obsession…
« We start with the customer, and we work backward »
Jeff Bezos, Amazon CEO
« Do what’s right for the customers, not what’s right for the business »
« ASOS is aiming to become the Amazon of Fashion »
Nick Robertson, ASOS CEO
« We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better »
« It’s all about changing the perception from ‘what can we sell’ to ‘what customers want’ and if we can sell some of that… then that’s fantastic! »
32
Amazon and ASOS, Same Pillars…AMAZON key pillars ASOS key pillars
Serve customers, ever better and in ever more ways, by improving customer proposition
through continued efforts to :
ASOS superior customer proposition is at the heart of all that we do.
Its credo: innovate restlessly to offer the best shopping experience through:
Reduce prices of products & services
The best offer & services at the best price
Increase selection of products offering
The world’s best Fashion selection
Increase in-stockinventory availability
The « best in class »products availabilities
Source : Jeff Bezos and Nock Robertson interviews
33
Inditex model… An Inspiration for ASOS Fashion Best Practises
INDITEX positioning ASOS (initial) positioning
This positioning requires to design “hot” products that capture the latest consumer trends and renew constantly your offer to stay on the edge
Customer value proposition:Give to a customer segment the latest Fashion trends from catwalks at affordable prices
Customer value proposition:Offer red carpet replicas and copies of dresses worn by actresses at affordable prices
Key resources: 1. Highly fashionable product design2. Fast speed to market (lead time)3. Cost structure optimization
Key resources: 1. Highly fashionable product design2. Fast speed to market (lead time)3. Cost structure optimization
Customer target: Highly sensitive to latest Fashion trends Price conscious
Customer target: Young, net-savvy Fashion Forward Price sensitive
34
Inditex fast-fashion, the best way to match with the latest customer trends
INDITEX Fast Fashion System 2 key pillars
Highly fashionable product designOffering consumers a product they value more elicits a greater willingness to pay from customers and make them less willing to risk waiting for a clearance sale and possibly experience a stockout.
Short production & distribution lead timesQuick responsiveness enables frequent changes in product assortment and more flexibility to adapt to the latest customer trends.It yields significant value for firms by better matching supply with uncertain demand.
Key resources: 1. Customer trends monitoring2. Quick design lead times
Key resources: 1. Local sourcing2. Efficient supply chain
Inditex has proven that when both fast fashion pillars are combinedthe firm enjoys a great incremental increase in profit
Source : The Value of Fast Fashion, G. Cachon, R. Swinney, Stanford University, 2011
35
Inditex and ASOS… Same Highly Fashionable Product Design Strategy
Louis Vuitton SS 2012 Catwalk Zara Spring 2012 Collection
INDITEX – Highly Fashionable ProductsFrom catwalks to the street
ASOS – Highly Fashionable ProductsFrom carpets to the street
Louis Vuitton SS 2012 Catwalk Alexa Chung - 2011Zara Spring 2012 Collection ASOS Autumn 2011 Collection
Both companies are very similar on these strategic pointsand really more competitive than traditional retailers
36
Inditex and ASOS…Same Quick Response Strategy
INDITEX quick response strategy
ASOSquick response strategy
Short lead timeFrom 2 weeks to 2 months(While 6 months for traditional retailers)
Short lead timeAround 6 to 8 weeks(While 6 months for traditional retailers)
Local sourcingOnly 35% of sourcing from Asia(While H&M 75% of products from Far East)
Local sourcingOnly 30% of sourcing from Asia(While H&M 75% of products from Far East)
Central inventoryWarehouses only in Spainwhile shops around the world
Central inventoryOne unique warehouse while ASOS delivers to 190 countries
Both companies are very similar on these strategic pointsand really more competitive than other traditional retailers
37
Asos goes beyond Inditex by setting a strong emotionnal relationship
Emotional degree
Phase ofthe Journey
Past experiences Comparison Purchase Reception Post experience
Whatshe thinks
« Let’s go on my usual
websites »
«This blog is so cool,
always like st
u� on it»
« I like Zara because
it’s cheap, but u
rban outfitters
and asos usualy fit bette
r with
me »
«There are so much choice
on Asos, it’s very im
portant
to me !» « This dress is quite
expensive for m
e but i can’t r
esist
nobody wear it my fri
ends will
like it a lot !»
« one more day to
wait !»
«I have just
checked asos
blogs and marketplace it’s great!»
She loves fashion and always take time to check the last trend on the web, she knows ASOS because of her friends and blogs
3 or 4 blogs that she likes and check 1/2 hour per week
Spend 30 min by day on Facebook, to chat mainly
Goes to H&M with her friends time to time because it’s near her house
She likes to read and share fashion magazines with her mother
She spends most of her shopping time comparing brands but also products. She’s looking for a product not for a brand. Her shopping time is mixing with her social activities and even with her studying time
The product have only taken 3 days to arrive
The more she goes on ASOS, the more she likes fashion world and feels close to it
Looking for her credit card and order
Waiting for her dress
The dress is arrived
Goes on Asos blogs and marketplace
Zara, Urban outfittersand Asos are all open at the same time
The buying decision is taken
Facebook and her favorite fashion blog are open
Openning her web browser
«I can return my products for free»
«The shipping was fast and free»
«Asos is a great place to shopping because it’s not only a showcase of products but a place to discover»
«Asos put the last trends in an a�ordable e-store»
38
Is Indi-Zon the real name of ASOS?
pure playermodel
fast fashionmodel
• Highly fashionable • Product design• Affordable Prices• Short Production and
Distribution Lead Time• Local Sourcing• Central Inventory
• Customer obsession• The largest selection• The best prices• The best availabilities• The best services
• Highly fashionable • Product design• Affordable Prices• Short Production and
Distribution Lead Time• Local Sourcing• Central Inventory
• Customer obsession• The largest selection• The best prices• The best availabilities• The best services
39
In a constantly changing world, companies can no longer do business in the same way as in the past. Indeed, companies now have to steer a course through a world where everything is changing at a high speed . It is forcing them to rethink their strategic choices along completely different lines. Those firms able to rapidly identify disruptive innovation and take up adequate strategies can gain the upper hand on competitors and become the next winners.
To build such strategies, Helixa has devised a series of new tools and proceeds by combining creativity with analysis to imagine for its clients what has as yet never seen light of day. With its wealth of experience in such sectors as luxury goods, media, retailing, chemistry, energy and internet and given its design thinking inspiration, Helixa can offer highly effective tailor-made solutions. Helixa’s team mixes engineers, strategists and designers.
Strategic Innovation to reinvent businesses
40
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